A tenant loan is an unsecured personal loan. It's called unsecured because the applicant does not need to supply any collateral or security to receive his / her loan. These are appropriate for people who lack sizable assets that can be employed as security or collateral. People who have bad credit fall into this category.
Tenant loans are quite common in the UK, though there are now US lenders who now offering these loans as well. In the UK, tenant loans are sought after by people who rent their homes, specifically those who are private, housing association, or council tenants. People who still live with their parents may also apply for these loans. In other words, to qualify for a tenant loan, one is usually required to be a non-homeowner.
But not all non-homeowners can qualify, an additional aspect of tenant loan basics is that you need to prove you have a stable source of regular income so that you can afford the repayment.
One common occurrence is that many lenders refuse to offer tenant loans to people who lack assets to put up as collateral because these borrowers are considered high-risk. Luckily, because of the demand for unsecured tenant loans, more and more lenders are becoming more lenient. Another plus is that, due to the high demand, interest rates for this type of loan have decreased significantly.
Because of these changes in the market, people who have less income may now be able to afford these loans. One may even be able to negotiate with lenders for longer repayment periods. Tenant loans do not cost as much as other forms of unsecured personal loans such as credit cards or payday loans.
Tenant loans may also be given to people with bad credit to help them rebuild their credit rating. These borrowers with bad credit may have to deal with higher interest rates due to the increased risk assumed by the lender.
A variation, is the any-purpose tenant loan. As its name suggests, you can take out this type of loan to meet any kind of need, whether for immediate or future purposes. The growing competition for tenant loan borrowers has made lenders more accommodating toward applicants, so they can fulfill the repayment schedule.
An additional service that has grown out of this industry is the tenant loan finder business. These specialists do not offer loans themselves; Rather, they will help you secure a tenant loan whose interest rates and terms match your particular circumstances. These specialists are generally help borrowers who have been turned down by traditional lenders, such as banks. In some cases, a fee will be charged for this service, but it's usually worth the added expense when you think about how much time you are saving by not having to research all the lenders on your own. In the end, you will simply have to read the data that the tenant loan finder digs up for you.
Paying for Your Loan
Since a tenant loan is an unsecured personal loan, the lender cannot take possession of your property because you did not put up any assets as security. However, if you fail to repay, the lender has the right to initiate legal action against you. To prevent this from happening, you should compute how much you can afford to pay monthly, inform your lender at the start of the application process, and stick to your repayment schedule.
In the UK, the repayment of a tenant loan lasts from 1 to 25 years. Like other forms of unsecured personal loans, you have to be wary about borrowing too much. Though the interest rates are higher for tenant loans than other types of loans, the borrower has the consolation of knowing his only risk is the danger of non-payment of the loan.
By being diligent about repayment, you will build your personal credit history and your credit score. If you are able to do so, you will be qualified for different types of loans, perhaps with lower interest rates, in the future.